Considering that most credit scores are ranked on a scale of 350 to 850, 427 is a very poor score, — a score which signals to lenders that you’re a credit risk.
As a result, many lenders won’t be interested in extending credit to you. If a lender is willing to work with you, however, be prepared to put down a deposit or pay extra fees as a condition of receiving credit.
Your Options With a 427 Credit Score
Unfortunately, a 427 credit score will make it very difficult — if not impossible — to qualify for the majority of financing offers. For example, you might qualify for a student loan or a secured credit card, but you’ll need to improve your score before applying for a car or mortgage loan.
What Causes Very Poor Credit?
Bad credit habits, such as not paying bills on time, a bankruptcy or home foreclosure, can all contribute to very poor credit scores. Plus, these negative items can impact your credit score for a number of years.
Late pays stay on your credit report for up to seven years. A Chapter 7 Bankruptcy stays on your report for 10 years, and a Chapter 13 Bankruptcy remains in your credit history for 13 years.
“Very Poor” 427 Score vs a “Fair” or “Good” Score?
A 427 credit score severely impacts your ability to qualify for most types of loans or unsecured credit.
A 427 score, is quite a few points away from the “Fair” credit range. For example, a fair credit score begins at 560, which is 133 points higher than a 427 score.
2. Pay bills on time
Whether or not you pay on time counts as the biggest piece of the credit score pie — a whopping 40 percent. Even if you’ve paid late in the past, you can start making changes now by paying at least the minimum payment due each month by the due date.
If your creditors have this, you can also set up text or email payment reminders or schedule automatic payments to help you avoid missing a payment again.
3. Reduce overall debt
If the amount of debt you have seems overwhelming, you have options. Consider speaking with a reputable credit counseling service for help devising a plan to tackle your debt. Or talk to your creditors directly about setting up payment plans for any delinquent accounts.
In some cases, you might be offered a debt settlement plan, which means you can settle your debt with the creditor for less than you owe. Although you could pay significantly less with this option, a settled debt can appear as a negative item on your credit report for up to seven years.
4. Put aside money for an emergency fund
If you can, start setting aside money for an emergency fund, which can keep you from losing progress.
For example, if you can save $50 to $100 per month, you’ll have $300 to $600 in your emergency fund in six months. Then, if you run a little short on funds at some point, you won’t have to forgo your payments.
5. Apply for a secured credit card
When your credit is bad, a secured credit card is a good option to begin recreating your credit. To be eligible, you’ll have to put down a security deposit, which will serve as your credit limit.
After using the card responsibly for a few months, you might want to consider depositing more funds to increase your limit. Opting for a higher credit limit can decrease your overall credit utilization, which can be a positive factor in a credit score.
To keep tabs on your credit, consider signing up for a product that provides credit reports and scores.
It’s possible that your credit report might contain errors that are hurting your score, which you can take steps to correct. However, you can also use this product to monitor your credit and your score over time.